Oct 16, 2015

Andrew Biggs Is Still Annoying -- And Wrong

When George W. Bush campaigned for the partial privatization of Social Security, Andrew Biggs, a Social Security employee, was at his side. That rankled me. I felt it was deeply inappropriate for a Social Security employee to take on such a politicized role. Bush later nominated Biggs to become Deputy Commissioner of Social Security. Senate Democrats blocked that nomination, suggesting that I wasn't the only one rankled by what Biggs did.
After his stint at Social Security, Biggs landed a job at the American Enterprise Institute, a Koch brothers front organization.
Biggs has a blog at the Forbes website on which he's posted a response to the Social Security discussion at the Democratic Presidential debate Tuesday night. The ideas of expanding Social Security and lifting the cap on wages covered by FICA both came up in the debate. Biggs makes the point that lifting the FICA cap wouldn't generate enough revenues to fund an increase in Social Security benefits. This is accurate but it's also rich coming from someone who campaigned for completely undermining Social Security's finances. President Bush never released a plan for partially privatizing Social Security but he was promising to keep paying benefits to everyone already drawing benefits or near retirement age, to not increase the FICA tax and yet to divert much of the FICA tax receipts to private accounts. Put all of that together and it would cost trillions of dollars. Did Biggs and Bush ever put forward a plan for paying for this? Of course not. Republicans never have to pay for their Social Security plans. Only Democrats have to pay for their plans.

Biggs points out that raising the FICA cap wouldn't be enough to assure that no further change would have to be made anytime in the next 75 years to protect Social Security's funding. He seems to believe that means there's no point in raising the FICA cap. Right. Lifting the FICA cap would only assure program funding until 2080 so obviously that idea is worthless. In fact, if you remove the FICA cap, you could do some modest benefit increases and still assure the future of the Trust Fund well into the future. That was what the Democratic Presidential candidates were talking about.
I think that Biggs will have to come up with some better arguments to convince the American people that it's a bad idea to raise taxes on the wealthy in order to give higher Social Security benefits to many.

4 comments:

Anonymous
said...

If Biggs, the American Enterprise Institute and the Koch Brothers got their way, what would American look like? It's not hard to imagine. Many more people with disabilities and likely seniors as well would be in great poverty to the point of being unable to afford the basic necessities of life. Those with supportive families would put a great strain on them. For those without that kind of support you'd see many more of them homeless, overloading our emergency rooms and soup kitchens, getting sick and dying prematurely. Their politics is the politics of human suffering and misery, except for the privileged few. One of the challenges of our generation is to stand up for human dignity and fight them.

"While red-meat progressivism sells in a Democratic primary, will ordinary Americans want to pay even more into Social Security to expand benefits when they could just as easily – and with greater confidence – save that cash on their own? I doubt it. It’s one thing to expand a government program on someone else’s dime, but another when you have to pay for it yourself."

Save cash on their own? Ok, Republicans, listen up. Not everyone lives in a nice house in the suburbs and drives a BMW. Most of us who represent disability claimants encounter families that live paycheck to paycheck and, especially in rural areas, cannot afford gas money to get to the doctor. So how are they going to save cash on their own for their retirement? I would really have a lot more respect for Republicans if they would just be honest and say "if you are poor, you are screwed and we don't care." Then, we could have an honest debate in the country.

IRA's have a participation rate of between 15-20%. 401k plans are only available to 50% of workers anyway but of those roughly 80% participate but only 10% put in the maximum. The Federal Thrift plan for non Civil Service employees (Hired after 1984) is at 87.5%. The key to participation in 401k's and the Thrift plan is that you are enrolled automatically and have to take steps to opt out of participation.

Essentially, unless coerced in some way, very few people choose to participate in any retirement plan at all. If SS was voluntary, or didn't exist, then we would be as America was before SS, work until you die or move to a poor house. And, without SS, that is exactly where we would be today.